Balloon Payment Loan Calculator
Calculate your monthly payment and final balloon amount
Enter your loan details to estimate the monthly payment and the balloon payment due at the end. Use the balloon as a percent or as a fixed amount.
Balloon payment loan calculator for monthly payments and end-of-term balance
A balloon loan is a loan where you pay a smaller monthly amount during the term, then a larger final payment (the balloon) at the end. This setup can make monthly payments look more affordable, but it shifts part of the repayment into a lump sum you must be ready to handle. This balloon payment loan calculator helps you estimate the monthly payment and the balloon amount due, so you can compare options realistically.
Use this calculator when you are comparing offers that include a residual value, a final lump sum, or a guaranteed future value. Balloon structures are common in vehicle finance and some business loans, and they are sometimes used to reduce instalments when short-term cash flow matters. The trade-off is straightforward: a larger balloon usually means lower monthly payments, but a higher balance left over at the end, which can increase risk if you cannot refinance, sell the asset, or pay the lump sum.
To get a useful estimate quickly, enter the loan amount, the annual interest rate, and the term in months. Then choose whether you want to set the balloon as a percentage of the original loan or as a fixed amount. The calculator will show the estimated monthly payment, the balloon due at the end, and practical totals like how much you will pay before the balloon and how much interest you will pay. If you are deciding between a normal amortizing loan and a balloon loan, the totals and the end balance are the numbers that stop you from being misled by a low monthly payment.
Assumptions and how to use this calculator
- Payments are monthly and interest is applied using a simple monthly rate (annual rate divided by 12).
- The balloon is treated as the remaining balance due at the end of the term (it is not spread across payments).
- If you leave the balloon blank or set it to 0, the result behaves like a standard fully amortizing loan.
- Fees, insurance, taxes, and penalties are excluded; these can materially change real-world affordability.
- Results are estimates; your lender may use slightly different rounding, day-count conventions, or compounding rules.
Common questions
What is a balloon payment and why does it reduce the monthly payment?
The balloon payment is the amount you still owe at the end of the loan term. Because you are not repaying that part of the principal during the monthly payments, the monthly payment can be lower. You are effectively postponing principal repayment, which improves short-term cash flow but creates a lump-sum obligation later.
Is a balloon loan cheaper than a normal loan?
Not automatically. A larger balloon reduces the amount of principal you repay during the term, which often increases the interest you pay over the same time period compared with a fully amortizing loan. The loan can be useful for cash flow reasons, but you should compare total interest and total cost, not just the monthly payment.
What happens if I cannot pay the balloon at the end?
In practice, you usually need a plan to settle the balloon: refinance it, sell the financed asset, or pay it from savings. If refinancing is not available or rates have increased, the balloon can become a problem quickly. Treat the balloon as a real future bill, not a theoretical number.
How should I choose the balloon amount?
Pick a balloon that matches a realistic exit plan. For vehicle finance, that might be the expected resale value under conservative assumptions. For business borrowing, it might be a planned cash event or a refinancing strategy. If you choose a balloon only to force the monthly payment down, you increase the risk of being trapped later.
How can I make this estimate more accurate?
Use the exact interest rate, term, and balloon from your quotation, and remember that fees can change the effective cost. If your lender charges initiation fees or monthly service fees, add them to your budget separately. If you expect to refinance the balloon, also test a worse-case interest rate so you know what you might face.